1. If you are served with an adjudication application, you should provide your lawyers with a copy as soon as possible.
The timeframe for preparing and serving adjudication responses is short: Both the Building and Construction (Security of Payment) Act 2021 (SOPA) and the Construction Contracts (Former Provisions) Act 2004 require a response to be served within 10 business days after service of the application. Preparing a response involves a significant amount of work, so any delay in providing the application to your lawyers may impact the detail and quality of the response. Additionally, the sooner your lawyers have a copy of the application, the easier it will be to respond within the 10 business day time frame.
Last year, due to matters outside its control, a client was unable to provide us with a complete copy of an adjudication application until several business days after it was served. As a result, we had reduced business days to obtain expert evidence and prepare the response. In the end, we managed to complete and serve the lengthy response by the deadline, but it was a close call, especially when we factored in time for printing 10,000 pages!
Matthew Endo, Solicitor
2. Seeking advice early can help to minimise disputes or avoid them altogether. Don’t wait for the worst before you ask for help.
A colleague recently shared a piece of advice he was given when he first started out in construction - “if you have to get the lawyers involved, you’ve lost”. I’m sure many others in the industry agree, but in 2025, I’d encourage people to challenge that mindset. In early 2024, a client contacted us after their first payment claim was rejected. We provided background advice on contract administration and the SOPA claims process for around six months, before stepping in to prepare an adjudication application.
The adjudicator awarded our client 100% of the amount claimed and, despite the messy start to the project, there was no lasting financial impact on our client’s business. It goes to show that admitting you need a hand is not ‘failing’ and engaging a lawyer doesn’t mean you’ve ‘lost’, it’s the first step to minimising any potential loss.
Briony Whyte, Senior Associate
3. A contractor or subcontractor’s right to issue a final payment claim under the SOPA does not last forever: where possible, seek advice before submitting a claim.
Section 23(5) of SOPA sets out the following four possible dates, and says that a final claim must be submitted before whichever occurs last:
Last year, we were instructed to adjudicate a final payment claim which had been prepared and submitted by our client. Noting the s23(5) time limits (above), we considered adjudication was risky, due to the length of time that had elapsed between completion of the work and submission of the claim. Given that the final payment claim had been submitted before our client approached us for advice, we were only able to outline the risks of adjudicating the claim, and advise the client about other methods of enforcement which were more suitable in that case.
Had the client approached us earlier, we would have advised them to issue their final payment claim before the statutory timeframe expired, to preserve their right to adjudicate and alleviate the risk of jurisdictional issues such as disputes about the validity of the claim.
Cherry Lee, Senior Associate
4. Check twice, issue once: make sure to check the contract before submitting your payment claims.
If you’re submitting payment claims under a construction contract, make sure you’re clear on these key details:
A lack of attention to these details can result in a payment claim being issued to an entity which is not liable in contract, and can lead to delays whilst additional (and unnecessary) issues are considered – for example, issues of agency, whether the payment claim was ‘given’ and ‘received’ by the relevant parties and if not, whether it’s possible to argue that the claim is valid anyway because the contractual requirements could not reasonably be complied with. That’s before you even get to the merits of the claim!
Lauren Cook, Partner
5. New year, new terms: it’s time to review your contracts.
The November 2023 amendments to the Competition and Consumer Act 2010, the ASIC Act 2001, and the Australian Consumer Law significantly expanded protections against unfair contract terms (UCTs) and had large construction, mining and resources companies urgently re-examining their standard contracts in 2024.
Briefly, the legislative changes apply to dealings with small businesses and consumers pursuant to ‘standard form’ contracts entered into or renewed after 9 November 2023, and provide that businesses whose contracts are found to contain UCTs now face strict penalties. The factors to be considered when assessing whether a term is unfair are now clearer (terms are unfair if they cause a significant imbalance in parties’ rights; are not reasonably necessary to protect a party’s legitimate interests; and would cause detriment to a party if relied upon) and the definition indicates that UCTs are likely to include terms that allow sweeping, unilateral changes or penalties disproportionate to the damage caused by a breach.
As a result of the substantial changes and strict penalties, it’s crucial that businesses proactively review and, if necessary, update any standard form contracts to ensure compliance in 2025.
Belinda Wong, Partner
6. Effective procurement strategies require advance planning
Principals – consider the form of procurement early in order to maximise the benefits of a particular strategy. Thinking about procurement ahead of time will result in a more considered, tailored and effective strategy.
For example, if you think that there is benefit in a design and construct approach for your project, consider where you are at in the overall design stage of the project; when (and whether) you’ll be willing to release some design control to the contractor; and whether you are willing to novate your consultants. The more developed the design, the more likely it is that you will need to novate consultants across to the contractor – particularly if the contractor is taking on design risk.
Early Contractor Involvement, or ECI, is currently a popular approach for principals, which sees the clear benefit of an experienced contractor becoming involved early enough to provide practical insights into the buildability of the project, amongst other things. However, if the Contractor is brought into the process too late, some of these benefits may be lost.
Isla McRobbie, Partner
7. Letters of award and intent are useful tools, but too little detail can be risky.
Letters of Award (LOA) and Letters of Intent (LOI) are frequently used in the construction industry to initiate project activities ‘and early works’ while formal contract terms are still being negotiated and formalised, but beware the trade-off between speed and risk.
Reliance on a “light touch” LOI can lead to unintended risks, particularly due to uncertainty as to whether and to what extent the LOI is binding; its scope and effect (both as to duration and financial coverage); whether it comprises a construction contract; and what essential contract terms might apply. While LOAs and LOIs are commercially practical and can help to facilitate project commencement, take time with (and ideally take advice on) their preparation, consider incorporating some detailed terms, and remember: the safest and most effective approach to minimising later disputes is to negotiate, finalise and execute a properly drafted construction contract before the works commence.
Tom Jacobs, Partner
8. Termination for convenience clauses aren’t as simple as they seem.
Termination for convenience (TFC) clauses are common in construction contracts (especially large procurement projects, such as those involving government entities), and can be a useful tool, particularly when the viability of the contract is dependent on matters beyond a party’s control. However, while parties are generally free to negotiate whatever bargain they choose, there are limitations on the enforceability of contracts which contain a right to terminate for convenience.
This is particularly so following the expansion of the UCT protections in late-2023 (refer above) as some TFC clauses, such as those which contain an exclusive right to terminate for convenience, allow for TFC without notice, or exclude any entitlement to compensation, may contravene UCT legislation.
To avoid this risk, parties should exercise caution when negotiating TFC provisions, ensure the contract is clear on whether and how much compensation will be payable on TFC, and consider incorporating an express obligation to act in good faith.
Edward Parra, Partner
If you have any questions about any of the topics above, or you require assistance navigating any other construction related legal issues in 2025, reach out to our team today.